In the eye-for-an-eye political culture of Washington, President Barack Obama's bank levy is a bona fide populist hit.
Channelling his fury about "massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people," Mr. Obama is playing to the crowds baying for banker blood in justifying his plan to touch the biggest banks in the United States for up to $90-billion (U.S.) in tax over the next 10 years to cover losses on the taxpayer-financed bailout that saved the sector. Mr. Obama is also opening himself to critics who rightly say that taxation shouldn't be about revenge.
It's a shame, because the rhetoric of retribution obscures the fact that the tax is a sounder policy tool than many people are giving the administration credit for, and one that at least deserves an adult debate.
Somebody has to cough up the cash to close the deficit hole that the bailout of financial firms is creating, a tally estimated at $90-billion that the worst basket cases will never pay back to the Treasury.
Unless he wants to add it to the burgeoning national debt, Mr. Obama has the two stark choices eternally facing politicians: cut spending or raise taxes.
Though many of the survivors have become historical revisionists and are loath to own up to it, almost all U.S. banks played a key role in the blowup, surviving in recognizable form thanks to taxpayer help and now reaping large profits from that same zero-interest-rate policy that hurts mainstream savers by lending out the cash at record margins.
Given that nobody in Washington seems to have the intestinal fortitude to reduce the budget - perhaps rightly so given that government spending is the main thing supporting economic growth - the fallback is a tax.
Every American is already paying for the financial crisis in myriad ways, chiefly lost jobs and minuscule interest rates on their savings courtesy of the zero-interest-rate policy the Federal Reserve has adopted to cope with the recession.
Many will face higher state and municipal taxes in coming years as those governments find ways to offset their budget woes. Does it make sense to add to that burden with any more at the federal level, or to tack the cost of the bailout onto the federal debt that every American is responsible for?
There's no rationale, similarly, for broader business taxes.
The sectors that brought the country's economy and the financial system to near ruin were real estate and banking, and the ones that benefited most from the bailouts were autos and, once again, banking.
There's no money in real estate or cars, and likely won't be for a good long time, so the only logical place to turn is the financial sector.
There may be loopholes and unintended consequences, and banks with their legions of lawyers and lobbyists will no doubt finagle around the measure, just as people ignore speed laws and all manner of other attempts to keep us from doing dumb things. That doesn't make them less worthwhile.
Though many of the survivors have become historical revisionists and are loath to own up to it, almost all U.S. banks played a key role in the blowup, surviving in recognizable form thanks to taxpayer help and now reaping large profits from that same zero-interest-rate policy that hurts mainstream savers by lending out the cash at record margins.
On top of that, banks get federal support (once implicit, now a whole lot more explicit) and the ability to make a lot of money from their position as government-sanctioned middlemen with the right to borrow at the cheapest rates. Asking for a little payback now and then doesn't seem so outlandish.
